| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
(d) On September 17, 2018, the Board of Directors (the “Board”) of Red Hat, Inc. (the “Company”) appointed Kevin M. Murai to serve, effective at the close of business on September 17, 2018, as a director of the Company for a term expiring at the Company’s next annual meeting of stockholders. A press release announcing the election was issued on September 20, 2018, and is furnished herewith as Exhibit 99.1 to this Current Report on Form8-K.
Mr. Murai has been employed by Synnex Corporation (“Synnex”), a company providing distribution, logistics and integration services for the technology industry and outsourced services focused on customer engagement, since March 2008. He served as President and Chief Executive Officer of Synnex from December 2008 until March 1, 2018 and served as President andCo-Chief Executive Officer from March 2008 until December 2008. He has served as a director of Synnex since March 2008 and became Chairman of the Synnex board of directors on March 1, 2018. Prior to joining Synnex, Mr. Murai was employed for 19 years at Ingram Micro Inc., a provider of global technology and supply chain services, where he served in several executive management positions, including as President, Chief Operating Officer and a member of the Board of Directors. Currently, he serves on the Board of Directors for StanCorp Financial Group, Inc., which on March 7, 2016 became a wholly-owned subsidiary of Meiji Yasuda Life Insurance Company and ceased to be publicly traded.
Prior to his appointment, the Board approved an increase in the size of the Board to nine members. There are no arrangements or understandings pursuant to which Mr. Murai was selected as a director. The Board has determined that Mr. Murai has no material relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that he is an independent director under the rules of the New York Stock Exchange. Mr. Murai has not yet been appointed to any committees of the Board.
Mr. Murai will be compensated under the compensation plan currently in effect for the Company’snon-employee directors, theNon-Employee Director Compensation Plan (the “Director Compensation Plan”). Under the Director Compensation Plan, he will be eligible to receive an annual cash retainer of $60,000 for his service as a member of the Board. In addition, the Director Compensation Plan provides for the following annual cash retainers for service on committees of the Board: (i) $20,000 for service on the Audit Committee; (ii) $15,000 for service on the Compensation Committee; and (iii) $7,500 for service on the Nominating and Corporate Governance Committee.
Under the Director Compensation Plan, a director may elect to receive all or a portion of any cash compensation in the form of the Company’s deferred stock units (“DSUs”). DSUs represent the right to receive shares of the Company’s common stock (“Common Stock”) at a future date. The number of DSUs to be granted is determined by dividing the portion of the cash compensation with respect to which the election is made by the closing price of a share of Common Stock on the date the cash compensation is due to be paid. DSUs issued in lieu of cash compensation are fully vested upon issuance and will be settled in shares of Common Stock upon termination of service on the Board.
In connection with his election to the Board, Mr. Murai will be granted, on the next regularly scheduled grant date for employees, a restricted stock award equal to a number of shares of Common Stock determined by dividing $300,000 by the closing price of a share of Common Stock on the date of grant. These shares of restricted stock will vest equally over a three-year period on the anniversary of the date of grant.
In addition to an initial equity grant, Mr. Murai will be eligible to receive an annual equity award consisting of a restricted stock award for a number of shares of Common Stock determined by dividing $250,000 by the closing price of a share of Common Stock on the date of grant. These shares of restricted stock will vest on the first anniversary of the grant date. Under the Director Compensation Plan, directors may also elect to receive DSUs on aone-for-one basis in lieu of any annual restricted stock award. These DSUs would vest on the same basis as the annual restricted stock award and will be settled in shares of Common Stock upon termination of service on the Board.
The foregoing description of the terms of the Director Compensation Plan does not purport to be complete and is qualified in its entirety by the provisions of the Director Compensation Plan, which was filed as Exhibit 10.51 to the Company’s Annual Report on Form10-K for the fiscal year ended February 28, 2018, and is incorporated herein by this reference.
The Company does not pay meeting fees.Non-employee directors are reimbursed for reasonableout-of-pocket expenses incurred in attending meetings of the Board and meetings of any committees of the Board on which they serve.
